Brent crude continued its march downwards on Friday and dropped to a 5-1/2-year low of $63 a barrel, bringing this week’s losses to more than 8 per cent amid persistent concerns over a supply glut and a bearish demand outlook.
The Organization of Petroleum Exporting Countries (OPEC), which accounts for a third of global oil output, cut its 2015 demand forecast to the lowest in more than a decade earlier this week.
“The recent bout of weakness has been a function of the concerns shifting a little bit more to the demand side now,’’ said Mark Keenan, head of commodities research in Asia for Societe Generale in Singapore.
“There has been perhaps a little bit of neglect of what the demand profile’s going to be like next year.’’
Front-month Brent crude slipped 35 cents to trade at $63.33 by 0322 GMT, after touching $63.00, the lowest intra-day level since July 2009. Brent traded above $115 in June.
January US crude was down 75 cents at $59.20, after falling more than a dollar to a low of $58.80, also the weakest since July 2009. The contract has lost more than 10 per cent so far this week.
Chinese data awaited
Oil markets are now waiting for top energy consumer China to release monthly crude output and refinery data as well as money supply data later in the day for more trading cues.
Weak economic indicators could put further downward pressure on oil prices, which have been hammered this year and plunged around 40 percent over the past five months.
Remarks by Saudi Arabia's oil minister reiterating that the kingdom will not cut output and a surprise jump in US crude and distillate inventories have driven crude down prices this week.
Battle for market share
OPEC exporters are locked in a battle for market share. Kuwait has set the official selling price for its crude sales to Asian buyers for January at $3.95 a barrel below the average of Oman/Dubai quotes, a trader said on Thursday, the lowest it has been since December 2008.
The market outlook is uncertain with some speculating that other OPEC members such as Algeria and Venezuela may convince the group to hold an emergency meeting early next year. Yet others doubt that Saudi Arabia would agree to production cuts even if such a meeting is held.